Next Anglo American CEO: South African Mining Tackling Key Issues for New Future

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Anglo American's (LSE:AAL.L) (London, England) CEO designate, Mark Cutifani, said in Johannesburg last week said that labor issues in South Africa's mining sector were scaring investors globally. He was speaking at a dinner organized by the Chamber of Mines, which was attended by South African Minister of Mineral Resources Susan Shabangu.

He summarized the problems as:

• Plans by the national power utility Eskom to raise prices steeply
• The threat by national transport utility Transnet to raise prices for mining companies
• Fears that the government could declare some minerals as "strategic"
• Wage discussions in the platinum and gold sectors
• Threats to licenses
• Changes to mineral resources laws
• Possible new mining taxes

Cutifani said that the mining industry could return to growth by confronting the issues, and that all these issues were either fixed or being worked on. He said that this positive turn was not being given attention worldwide. He quoted the fact that Eskom's increases had been regulated to 8% after the utility had requested 16%, and that miners had been in discussions over the new Mineral and Petroleum Resources Development Act.

South Africa's mining industry has flagged in recent years, battling a stream of bad news that included the Marikina shootings in 2012 and the former African National Congress youth leader Julius Malema's campaign for mines to be nationalized. It meant that while the JSE's all-share index climbed 60% from 2008 onwards, South Africa's mining firms did not grow at all in real terms. "When you take into account inflation, that means we've destroyed about 30% value," Cutifani said, according to Business Day.

Anglo American and Shabangu have clashed a number of times over the past months but she gave Cutifani a glowing endorsement. "Anglo American is ours, it is a South African company, and we want to see Anglo continue to brand itself as a South African company," she said.

Cutifani, who has been CEO of Anglo Gold Ashanti (NYSE:AU) (Johannesburg) for the past six years, will take the helm at Anglo American in its London offices.

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